Norges Bank raised no objections to the Financial Supervisory Authority of Norway’s recommendation to maintain minimum average risk weights of 25% for residential mortgages and 35% for commercial property loans. In its response to the Ministry of Finance, the central bank assessed that macroeconomic and systemic risks had not changed materially overall since 2024. The floors apply to banks using the internal ratings based (IRB) approach.
Capital safeguards should limit model uncertainty and cover systemic risks that banks’ models do not fully capture, while minimizing any weakening of incentives for sound risk management. Changes to capital rules in 2025 left overall capital adequacy in Norway’s banking sector broadly unchanged. A separate output floor on IRB banks’ aggregate capital calculation base is being phased in. Given current bank balance sheets, it would become binding for some Norwegian IRB banks only when fully implemented in 2030.
The ongoing European Union review of capital rules also informed the assessment, as potential changes are likely to affect banks’ capital requirements and capacity to absorb losses. The European Commission is expected to present concrete proposals in the first quarter of 2027, potentially covering minimum risk weights alongside other elements of the capital framework.